The Indian agricultural sector can be a powerful driver of economic transformation that India is crafting today. Although the sector provides livelihoods for half of the country’s population, it’s contribution to GVA is low, manifesting in lower farmer incomes as well.
Production of several crops in the country are amongst the highest in the world, and yet processing is so meagre. The agriculture sector must provide food, feed, fibre and livelihood security to one of the most populous countries in the world, but it is also the most vulnerable to the threat of climate change. Therefore, this sector stands at the crossroads of three of the greatest challenges of the 21st century – sustaining food and nutrition security, climate change and sustainable use of critical resources such as water, energy and land.
It is mission critical today to usher in NexGen agriculture, make the sector future-ready and climate resilient and take farmer incomes to a higher orbit to trigger a virtuous cycle of consumption, investment and employment.
Several areas vie for priority to enable a transformative change in this sector. To my mind, top-most is the need to address the existential crisis posed by climate change. Estimates by the National Innovations in Climate-Resilient Agriculture (NICRA), project that rainfed and irrigated rice yields will reduce by by 2100. Across the world, climate change has already led to worrying decrease in yields and crop production be it in the US, Europe, Brazil, and others. It is today increasingly clear that the world will witness a breach of the Paris Agreement 1.5-degree goal and the rise could even be upwards of 2 degrees.
Therefore, even as the world focusses on mitigation measures, adaptation will be equally, if not more critical to the agricultural sector in the years to come. Climate Smart Agriculture to build farmer resilience, larger adoption of modern technology and innovative green financing will be critical. It will also be important to carry out climate risk modelling on a large scale to identify vulnerability and put in place site-specific solutions.
Global food demand is expected to increase anywhere between 59% to 98% by 2050, according to an article in the Harvard Business Review. This is both a concern and an opportunity. On the one hand, India is likely to witness food demand growing by 60% as population moves to 1.7 billion. This will put immense pressure on limited resources like land. Increased food production will be required amidst depleting natural resources. On the other hand, India has strong endowments in agriculture, but its share of global trade is only 3%, whilst less than 10% of the country’s agri produce is processed.
With focussed agri-transformation, India could become a source of agri-food exports for the world, whilst addressing emerging consumer needs in the country. A report by the High-Level Expert Group (HLEG) set up by the 15th Finance Commission has highlighted that India’s agri-food exports can double over the medium term, given that the country possesses the largest tracts of arable land in the world as well as diverse agro-climatic zones. There is also a movement towards healthier and more nutritious food products that allows value addition. Agriculture being a provider of biodiesel, which tackles climate change, is another opportunity in India.
Undoubtedly, all this will call for higher levels of production, building of competitive agri value-chains, crop diversification to value-added products and scaling up of food processing to serve emerging consumer needs for products that are sustainable, and identity preserved particularly in the health, nutrition and organic space. Moreover, inclusive efforts will have to be heightened to gainfully support the millions dependent on this sector. A game changer lies in the power of FPOs and their inherent strength of aggregation. The Government of India has indeed taken very far-sighted steps to promote FPOs with multi-dimensional schemes to support capacity building and value addition. Undoubtedly, this will be the pivot that will transform Indian agriculture, bring the benefits of collective power to enable capacity building, enable procurement of right quality inputs, help in leveraging the best of market opportunities, access appropriate finance, insurance and so on. It addresses the chronic problem of fragmentation in Indian farms, besides enabling scale and market-based production.
New-age digital technologies can indeed provide a thrust to this sector. The rise of the agritech industry will also aid in the transition from resource-intensive farming to sustainable farming. As per E&Y Estimates, adoption of technology in agriculture presents a market potential of USD 24 billion. India’s agritech sector has grown in leaps and bounds over the last few years from having only 43 startups in 2013 to more than 1500 startups operating in the sector now, bringing a wide range of innovative solutions to the farmers. However, even with this impressive growth, the industry in India is still in infancy stages with just 1 per cent penetration. Most agtech solutions are largely point solutions. This calls for a solutions integrator that can stitch together several unique services into one unified platform. Over time, adoption of digital and agri-tech solutions will increase, drive productivity, improve quality of produce, extend personalised advisory and provide modern tools and platforms for better market access.
It is commendable to note that the Government of India has initiated several schemes such as the Digital Agriculture Mission, which aims to improve agriculture’s overall performance by leveraging a wide range of the latest technologies like AI, Blockchain, drone technology, amongst others. The National e-Governance Plan in Agriculture (NeGPA) programme will also lead to rapid development in India using Information & Communication Technology, including Drone technologies that are being adopted nationwide.
CII has remained committed to deepening its engagement in the AgriTech space and is continuing the focus on enabling technology uptake at the farmer level. To further its agenda of a sustainable future, the 15th CII Agro Tech India 2022 focused on sustainable agricultural technologies; enhancing productivity and profitability for various stakeholders in the agriculture chain; innovations for growth and sharing of best practices for agri-excellence. This first edition after the pandemic had 258 exhibitors including 9 international exhibitors from countries including Germany, Netherlands and Australia.
Through such initiatives, we are certainly on the path to forge innovative solutions for a very crucial sector in India and contribute to a resilient, sustainable and inclusive future.
This article is contributed by Mr Sanjiv Puri, Vice President, CII & Chairman, CII Agro Tech India 2022 and Chairman & Managing Director, ITC Ltd. It was first published in the December 2022 edition of CII Communique.